CO2 emissions of road traffic in the EU ETS

Including road transport in the existing European emissions trading system makes sense because it places a ceiling on emissions and ensures that CO2 reductions are made where this is cheapest. With a simultaneous reduction of the fuel taxes for road transport, the efficiency increases even more.

The European Commission is considering applying emissions trading to CO2 emissions from road transport and buildings. This could be done through an extension of the existing emissions trading system (EU ETS) or through a new, separate ETS for these sectors.
To substantiate its position on this, the FIA, Féderation Internationale de l'Automobile - European Bureau, has asked TML to conduct a study.

Future scenarios from the European Commission indicate that the climate objectives of road transport will not be achieved with existing policy. The vehicles are becoming more and more efficient, but due to the increasing traffic volumes, the absolute emissions fall insufficiently. That is why inclusion in the EU ETS makes sense: it puts a ceiling on emissions that decrease year after year.
Existing fuel taxes in the EU already create an implicit carbon tax that is much higher for road transport (between € 160 and € 240/ton CO2) than for other sectors (about € 40/ton CO2). Additional CO2 reductions are therefore more expensive in road transport than in other sectors. The inclusion of road transport in the EU ETS makes emissions trading possible. In this way the reductions can first be realized in the sectors that can reduce their emissions at the lowest cost. Cost efficiency can be further increased by phasing out the existing fuel taxes on road transport so that we move towards a more equal level of carbon tax in all sectors.
We compared different options for applying emissions trading for road transport. Of these options, the following offers the most advantages: inclusion of road transport in the existing EU ETS, both for freight and passenger transport, at the level of the fuel distributors, with an auction of the emission rights. This can be complementary to existing instruments such as the CO2 standards for new vehicles and makes some other instruments superfluous. Accompanying policy is needed for low-income groups.

In the report we map out the current policy for CO2 reduction of road transport and we explain how the EU ETS works. We then examine the possible options for applying emissions trading in this sector and the interaction with existing policy instruments. Finally, we analyze the expected impacts of the most relevant options.

The final report is published on the client's website and serves as the basis of the FIA's communication to its members and its defense of position to European policymakers.


Féderation Internationale de l'Automobile - European Bureau

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Sara Ochelen, Stef Proost
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